Judge Ronald F. Frank, Case 21TRCV00594 2023-02-16 Tentative Ruling

Judge: Ronald F. Frank, Case: 21TRCV00594, Date: 2023-02-16 Tentative Ruling

Case Number: 21TRCV00594 Hearing Date: February 16, 2023 Dept: 8

Tentative Ruling¿

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HEARING DATE: February 16, 2023¿¿

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CASE NUMBER: 21TRCV00594

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CASE NAME: Robert Bass, et al v. Tim Roth .¿¿¿

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MOVING PARTY: Defendant, Timothy R. Roth

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RESPONDING PARTY: None.

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TRIAL DATE: Not Set.

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MOTION:¿ (1) Demurrer¿

(2) Motion to Strike

Tentative Rulings: (1) Defendant’s Demurrer is Sustained, with leave to amend the fraud cause of action. Discuss at oral argument whether leave to amend should be given as to the contract claim

(2) Defendant’s Motion to Strike is mooted by the sustaining of the Demurrer

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I. BACKGROUND¿¿

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A. Factual¿¿

On August 12, 2021, Plaintiffs filed their Complaint. Plaintiffs allege the following facts. Plaintiffs and Defendant entered into a settlement agreement in Case No. YC072026. Defendant breached the settlement agreement. On July 5, 2022, Plaintiffs filed a First Amended Complaint (“FAC”) alleging causes of action for: (1) Breach of Oral Contract; and (2) Fraudulent Misrepresentation.

Defendant, Timothy Roth (“Defendant”) now demurs to the FAC and has filed a motion to strike portions of Plaintiffs’ FAC.

B. Procedural¿¿

On August 4, 2022, Defendant filed this demurrer. On August 22, 2022, Defendant filed a Motion to Strike. On February 9, 2023, Plaintiffs late-filed a combined opposition to both the Demurrer and Motion to Strike. On February 10, 2023, Defendant filed reply briefs.

¿II. MEET AND CONFER

Counsel for Defendant, Einar Wm. Johnson filed a declaration in which he noted that on July 21, 2022 he sent an email to Plaintiffs’ attorney to initiate a meet and confer effort. (Declaration of Einar Wm. Johnson (“Johnson Decl.”), ¶ 2.) Johnson noted that he invited a phone call to address the issues in the email, he never received a response from Plaintiffs’ counsel. (Johnson Decl., ¶ 3.)

III. MOVING PARTY’S GROUNDS

Defendant demurs to the First and Second Causes of Action on the grounds that each fails to state facts sufficient to constitute a cause of action, is barred by the statute of limitations, and is uncertain, ambiguous and unintelligible.

Defendant also files a Motion to Strike the following portions of the FAC:

1. The following allegations on Page 3, lines 12-15: “ROTH made multiple oral representations in December 23, 2019, that he would but ultimately failed to pay the remaining balance, and at times contained in text messages ROTH transmitted to Plaintiffs. Additionally, ROTH promised to pay quicker if Plaintiffs did not file any lawsuit to recover unpaid sums.”

2. 2. The following allegations on Page 3, lines 20-22: “The oral Settlement Agreement between Plaintiffs and Defendants implies an award of attorney fees and costs that are incurred to enforce the Settlement Agreement as well as interest at the rate of 10% per annum.”

3. The following allegations on Page 4, lines 13-14: “Defendant Roth made these representations recklessly and without regard for their truth.”

4. The following allegations on Page 4, line 14: “Roth never intended to fully pay the settlement amount.”

5. The following allegations on Page 4, lines 14-21: “Rather ROTH intended to make only partial payments in a scheme to extend the debt beyond the Statute of Limitations for legal collection of the debt. ROTH made a series of excuses for non-payment and/or partial payments on the debt between, December 27, 207, and December 23, 2019, as memorialized in a series of text messages stating in effect, that ROTH was experiencing hard times and could only make partial payments of five or ten thousand dollars. ROTH knew his promises to pay were false; intended to deceive and induce reliance in BASS; caused BASS to justifiably rely on false premises of payment, causing BASS damages.”

6. The following allegations on Page 4, lines 22-23: “Plaintiffs reasonably relied on Defendant ROTH’S representations and were harmed and suffered monetary loss.”

7. The following allegations on Page 4, lines 24-26: “Defendant ROTH’S acts as alleged above were despicable and were committed with malice, oppression, and fraud, knowing that his continued misrepresentations would be relied upon by people he knew to be vulnerable to his scheme to defraud.”

8. The Prayer for Relief in its entirety on Page 5, lines 2-9.

¿IV. ANALYSIS¿

A. Legal Standard

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿¿

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A pleading is uncertain if it is ambiguous or unintelligible. (Code Civ. Proc., § 430.10, subd. (f).) A demurrer for uncertainty may lie if the failure to label the parties and claims renders the complaint so confusing defendant cannot tell what he or she is supposed to respond to.¿ (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) However, “[a] demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.)¿¿

B. Discussion

As a preliminary matter, Plaintiffs’ opposition to Defendant’s Demurrer and Motion to strike was untimely. In the body of the tardy opposition, Plaintiffs seeks relief under California Code of Civil Procedure, section 473 from the deadline within which to oppose a demurrer and motion to strike must be filed. Plaintiff’s counsel asserts that due to an inadvertent and mistaken mis-calendared opposition due date, he failed to respond to either the Demurrer or Motion to Strike.

The Court finds good cause to overlook the defect in this instance and rule on the motions on their merits. The Court also solicits a representation from plaintiff’s counsel as to how he has or will update his office’s internal controls to avoid such problems from occurring again.

Breach of Oral Contract

“The elements of a cause of action for breach of contract are: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391(internal quotations omitted).)

Here, Plaintiffs’ FAC alleges that on December 27, 2017, Plaintiffs and Defendant, Roth entered into an oral contract for settlement of the Original Complain. (hereinafter “Settlement Agreement”). (FAC ¶ 6.) Plaintiffs further allege that the essential terms of the oral contract were that Defendant agreed to pay Plaintiffs the sum of $115,000 on or before December 23, 2019, and Plaintiffs agreed to dismiss the Original Complaint in exchange for the full payment of $115,000. (FAC ¶ 6.) Plaintiffs allege that they performed, submitting a Request for Dismissal with the Court on January 3, 2018. (FAC ¶ 7.) Plaintiffs also note that Defendant made intermittent payments between December 27, 2017, and December 23, 2019, pursuant to the Settlement Agreement to Plaintiffs, in the total amount of $37,500. (FAC ¶ 8.) However, Plaintiffs allege that Defendant breached the Settlement Agreement by failing to make any further payments to Plaintiffs, leaving an unpaid balance owing to Plaintiffs in the amount of $77,500. (FAC ¶ 9.) Further, since the alleged oral agreement was to pay within one year, even the partial interim payments arguably accrued a cause of action well before 2019. Plaintiffs allege that they demanded Defendant to pay the remaining balance, but Defendant has failed to do so, making multiple oral representations in December 23, 2019, that he would, but ultimately failed to pay the remaining balance, and at times contained in text messages he transmitted to Plaintiffs. (FAC ¶ 10.) Lastly, Plaintiffs allege that the oral Settlement Agreement implies an award of attorney fees and costs that are incurred to enforce the Settlement Agreement as well as interest at the rate of 10% per annum. (FAC ¶ 13.)

In his demurrer, Defendant asserts that despite the allegation in the First Amended Complaint that Defendant had purportedly agreed to pay Plaintiffs a sum certain by December 23, 2019 (First Amended Complaint at 2, line 24 to 3, line 1), this allegation is directly contradicted on the face of the pleading by Plaintiffs’ admission in the First Amended Complaint that “BASS agreed to accept the principle amount of $115,000 without interest within one year of the settlement agreement.” (First Amended Complaint at 4, lines 6-7;| emphasis added). The First Amended Complaint states that the purported settlement agreement was entered on December 17, 2017. (First Amended Complaint at 2, lines 23-24.) Defendant argues that this is an admission of Plaintiffs on the face of the First Amended Complaint and establishes that the alleged agreed payment was to be made by December 16, 2018. If so, the statute of limitations as to the alleged oral agreement would have expired no later than December 15, 2020. As such, Defendant argues, Plaintiff’s commencement of this action on August 12, 2021is well beyond the two-year limitation period for breach of an oral contract.

In Plaintiffs’ opposition, they request leave of this Court to amend their complaint should this Court find any merit in the demurrer and motion to strike. However, Plaintiffs also assert an amendment to paragraph 6, page 3, line 1 to read “within 1 year of the date of the settlement agreement” rather than December 23, 2019, because December 23, 2019 was the date of the last payment made under the terms of the settlement agreement.

In his reply brief, Defendant notes that Plaintiffs failed to provide any justification for this request to amend the FAC. The Court agrees. If Plaintiffs wish to amend their operative complaint, they must properly file and notice a Motion for Leave to Amend or await ruling on the Demurrer. Further, Defendant asserts that the requested amendment is factually inconsistent with the existing FAC and would not solve the statute of limitation bar that Defendant is arguing. Defendants contend that Plaintiffs sought amendment would change a purported 2019 obligation date to a purported 2018 obligation date which would result in an earlier time bar on the face of the complaint. Implicitly, the defense is arguing that such an amendment would run afoul of the “sham pleading” doctrine. (See JPMorgan Chase Bank, N.A. v. Ward (2019) 33 Cal.App.5th 678, 690.) Generally, if a verified complaint contains allegations fatal to a cause of action, a plaintiff cannot cure the defect by simply omitting those allegations in an amended pleading without explanation. (Hendy v. Losse (1991) 54 Cal.3d 723, 742.) Courts allow an amendment to sure or fix a fatally defective allegation in a prior pleading where a plaintiff demonstrates the earlier pleading was the result of mistake or inadvertence. (Id. at p. 743; Meyer v. State Bd. of Equalization (1954) 42 Cal.2d 376, 386.) Here, there is no verified pleading so the sham pleading doctrine does not apply. However, the Court will be interested to learn during oral argument the reasoning behind the proffered amended language, and whether as amended the Complaint would avoid the bar of the two-year statute of limitations for breach of oral contract.

Based on the foregoing, this Court finds that Defendants have not alleged sufficient facts to support a cause of action for Breach of Oral Contract. As such, the demurrer is sustained.

Fraudulent Misrepresentation

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Here, the FAC alleges that Defendant made various verbal and written representations to Plaintiffs that were knowingly false. (FAC ¶ 15.) Specifically, Plaintiffs allege that during an in-person conversation between Plaintiffs and Defendant on December 27, 2017, in the office of Defendant at 325 Pacific Coast Highway, Hermosa Beach, Defendant orally promised to pay Plaintiffs $115,000 in settlement of the Civil Complaint in Los Angeles Superior Court case number YC072026 (“Original Complaint”) alleging fraud against Defendant. (FAC ¶ 15.) Plaintiffs note that they agreed to accept the principal amount of $115,000 without interest within one year of the Settlement Agreement. Thereafter, the unpaid principal would bear interest at the legal rate. The intended legal effect of the Settlement Agreement was to settle and resolve the debt set forth in the Civil Complaint in exchange for the promise to dismiss the Civil Action. (FAC ¶ 15.) Plaintiffs further contend that Defendant knew his representations were false at the time he made them and intended to deceive Plaintiffs and induce their reliance on the false promises. (FAC ¶ 16.) Further, Plaintiffs assert that they reasonable relied on the representations and were subsequently harmed. (FAC ¶ 17.)

First, Defendant argues in his demurrer that Plaintiffs cannot meet the specificity requirements of the alleged fraud claim because the allegations that follow reference the alleged “oral promise” by Defendant to pay “BASS” when there are two Plaintiffs referenced as “BASS” thus lacking specificity. Additionally, Defendant asserts that Plaintiffs FAC asserts that “Defendant ROTH knew his representations about the payment schedule of the Settlement Agreement to be false at the time he made the representations to Plaintiffs and entered into the Settlement Agreement.” (FAC, ¶ 4.)Defendant claims this language is conclusory and contains no statements of “fact”. Defendant further argues that there is no “payment schedule” alleged prior to this allegation and Plaintiffs simply assert the sum purportedly agreed upon was to be paid “within one year of the Settlement Agreement.” (FAC, ¶ 4.) Defendant contends that since the Plaintiffs had complete control over the purported terms they were willing to commit to in a purported agreement for dismissal they could not have reasonably relied on a supposed intentional false statement in that regard. Defendant notes this is illustrated by Plaintiffs’ own description of the purported oral agreement would not allow for dismissal without the payment being made. Since dismissal occurred Plaintiffs either acknowledged any payment obligation was satisfied or waived or otherwise extinguished any.

In opposition, Plaintiffs argue, conclusively, that they have plead facts sufficient to state a cause of action for fraud. However, in opposition, Defendant notes, and the Court agrees, that simply because the Defendant can tell that a fraud claim is being asserted against thim, does not mean that the specificity requirements of fraud are met on the face of the pleading. The mere fact alone that Plaintiffs have tried to use a late-filed opposition to a demurrer and motion to strike to amend their FAC is enough for the Court to conclude that Plaintiffs’ FAC does not meet the specificity requirements.

As such, the demurrer is sustained, with leave to amend the fraud cause of action.

B. Motion to Strike

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading.¿ (Code Civ. Proc., § 436(a).)¿ The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.¿ (Id., § 436(b).)¿

However, given that the demurrer is being sustained, the Motion to Strike is mooted.